U.S. Gambling Taxes by State

Paying taxes on gambling winnings can put a damper on a big win. The rules get even more confusing because how much you owe depends not only on federal law but also on where you live (and where you gambled). In this guide, we break down U.S. gambling taxes by state in plain English. We’ll explain federal tax obligations on casino and lottery winnings, how each state taxes gambling income, and what happens if you don’t report your winnings.

We’ve also included an at-a-glance comparison table and a state-by-state rundown from Alabama to Washington, D.C. so you can quickly find your state’s policy. Short paragraphs and clear headings should make it easy to scan – even if tax talk isn’t your idea of fun!

Do You Have to Pay Taxes on Gambling Winnings?

Yes. In the United States, all gambling winnings are taxable income. Whether you hit a jackpot on a slot machine, win a poker tournament, score a lottery prize, or cash out on a sports bet, the winnings must be reported on your income tax return. The IRS considers gambling proceeds “other income,” which you report on Form 1040.

Federal taxes

Gambling winnings are subject to federal income tax. In fact, the payer (casino, lottery, sportsbook, etc.) is required to withhold 24% of certain large winnings for the IRS right off the top. For example, casinos will usually withhold federal tax if your win exceeds $1,200 on slots or bingo, $1,500 on keno, $5,000 on a poker tournament or lottery/sweepstakes, or $600 on horse racing (if 300× bet) – these thresholds trigger the IRS Form W-2G reporting and withholding rules. Even if no tax is withheld upfront (for instance, you won a smaller amount), you still owe federal tax on all your gambling winnings when you file your return.

Reporting winnings

You report gambling income on the “Other Income” line of your 1040. If you received any Form W-2G (which reports your winnings and any tax withheld), you’ll include that info on your tax return. Keep in mind, the 24% withheld is just an estimate – your actual federal tax rate on the winnings could be higher or lower depending on your total income for the year. For big wins, you might end up owing more when you file; for smaller wins or lower overall income, you might get a refund of some of the withholding.

Can you deduct losses?

Yes, gambling losses can be deducted against gambling winnings – but only if you itemize deductions and only up to the amount of winnings. In other words, you can’t claim a net gambling loss to reduce other income. You’ll need detailed records of your bets,

How States Tax Gambling Winnings

Federal taxes are only part of the story. You may also owe state taxes on your casino, poker, lottery, or sportsbook winnings. State gambling tax rules vary widely. Some states don’t tax gambling income at all, while others treat it like ordinary income (with tax rates that can exceed 10%). A few states even have special withholding rules or flat taxes on gambling payouts. Here are some general points to know:

• States with no income tax: If you live (and gamble) in a state with no state income tax, you’re off the hook for state gambling tax. As of 2025, nine states have no personal income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (no tax on wages/gambling, only on interest/dividends). Gambling winnings in these states are not subject to state tax – a welcome relief for winners in Vegas or Miami. However, federal tax still applies in all cases.
• States with income tax: Most other states treat gambling winnings as state-taxable income. That means if you win in a state that has an income tax, you’ll owe state tax at whatever rate applies to your total income. Many states simply include gambling winnings in your annual taxable income (so it’s taxed at your normal state income tax bracket). For example, a $10,000 casino win for a New York resident would be added to their income and taxed at New York’s state rates (which go up to 10.9% for high earners). A few states impose a flat tax on gambling payouts or have special rules, which we’ll note in the state-by-state section.
• State withholding on big wins: Some states require the casino or lottery to withhold state income tax from large gambling prizes, just as the IRS does. The threshold for state withholding is often the same as the federal ($5,000), but it varies. For instance, Maryland withholds 8.75% on gambling winnings over $5,000 for residents (7% for non-residents). New York withholds about 8.82% for state tax on big wins. Massachusetts requires 5% withholding on lottery prizes over $600. On the other hand, some states do not have any state withholding – you’ll just settle up at tax time. Always check your state’s rules so you aren’t caught by surprise.
• Non-resident winners: What if you hit a jackpot in a state you don’t live in? Generally, the state where you won has the first claim to tax the income. For example, if you’re a resident of Texas (no income tax) but win money at a New Jersey casino, New Jersey state tax law applies to that prize. You may have to file a non-resident state tax return there and pay its gambling income tax. The good news: your home state will often give you a tax credit for taxes paid to another state, to avoid double taxation. (If your home state has no income tax, then no credit is needed – you just pay the state tax where you won). The key is that someone will tax your gambling haul at the state level if it’s in a taxing state.
• Local taxes: In a few places, there may even be local taxes. For instance, New York City charges city income tax (up to 3.876%) on residents’ income (including gambling wins), and Yonkers, NY adds a 1.477% local tax. Most cities and counties don’t tax separately, but be aware of local obligations in places like NYC or Philadelphia.

Now, let’s get into specifics. The comparison table below gives a snapshot of gambling tax treatment in each state. After the table, we provide a state-by-state explanation with key details, including tax rates, special rules, and legal citations.

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Table Notes: “Taxable?” indicates if the state taxes individual gambling winnings. “State Tax Rate” shows the flat rate or top marginal rate on gambling income. “State Withholding?” highlights if state tax is typically withheld from large payouts (e.g. lottery or casino wins), and “Legal Citation” provides a reference to the state law or tax code (for informational purposes).

California: California exempts state lottery winnings from state income tax (so a California Lottery jackpot is tax-free at the state level). However, winnings from other states’ lotteries or any non-lottery gambling (casinos, horse racing, etc.) are taxable in CA as regular income. Also, California does not allow casinos to withhold state income tax from gambling payouts – you settle any state tax due when you file your return.

Montana: Montana has unusual rates for certain games: e.g. a 15% state tax on slot machine winnings and 1% on bingo/keno winnings (reflecting special revenue taxes). Other gambling income is taxed at the normal income tax rates shown.

Now, let’s break down each state’s gambling tax situation in more detail:

Alabama

Alabama taxes gambling winnings as part of your normal state income. The state has a progressive income tax ranging from 2% up to 5%. In practical terms, any gambling winnings over $500 will be taxed at 2% to start, and larger wins could push you into the higher 4% or 5% brackets. Alabama does not have special withholding for gambling payouts – you’ll report your winnings on your Alabama tax return for the year. (Legal reference: Alabama Code Title 40 – income includes “prizes and awards” such as lotteries and gambling winnings.)

Alaska

Good news for winners in Alaska: the state has no personal income tax, so it does not tax gambling winnings at all. You’ll still owe federal tax, but Alaska won’t take a penny of your casino or lottery prize. (Alaska is one of the few states with no income tax, which is why many consider it gambler-friendly from a tax perspective.)

Arizona

Arizona treats gambling winnings as ordinary income. Until 2021, Arizona had a graduated tax (2.59% up to 4.5% for big wins). Now, Arizona has a flat income tax of 2.5% for all taxpayers as of 2024. That means your gambling winnings will simply be taxed at 2.5% by the state, regardless of amount. Arizona doesn’t require special state withholding on gambling payouts, but you’ll need to report the income on your AZ return. (Legal reference: Arizona Revised Statutes § 43-1022.)

Arkansas

Arkansas has a unique rule for casino and electronic game winnings. The state levies a special 3% “gaming winnings tax” on any single casino/slot payout of $1,200 or more. In other words, if you hit a jackpot of $1,200+ at an Arkansas casino, 3% will be withheld on the spot for state tax. Smaller wins under $1,200 aren’t taxed by the state (though federal tax may apply).

Note that this 3% tax is generally the only Arkansas state tax on that win – it covers the state’s share (Arkansas’ regular income tax brackets go up to ~4.9%, but gambling winnings are handled via this special tax). You’ll still report the income on your state return, but the 3% withholding satisfies most of the liability. (Legal reference: Arkansas Code § 26-51-1309, “Gaming Winnings Tax.”)

California

California has high state income tax rates (1%–13.3%), and it taxes gambling winnings as income except for one big exception: California Lottery prizes are exempt from state tax. If you win the CA state lottery (e.g. SuperLotto or a scratcher bought in CA), you won’t owe California tax on that prize. But casino winnings, poker, sports betting winnings, and out-of-state lottery wins are taxable by CA at your regular tax rate, up to 13.3% for the biggest incomes.

California does not have state withholding on gambling payouts, even large ones, so make sure to set aside money for the tax man when you win. (Legal reference: California Revenue & Taxation Code § 17132.5 excludes CA lottery winnings from income.)

Colorado

Colorado taxes gambling winnings at the state’s flat income tax rate. Currently, Colorado’s rate is 4.40%. So any casino or betting winnings won by Colorado residents (or within Colorado by visitors) are taxed 4.4% by the state. One wrinkle: Colorado’s law historically was simple – a flat 4.63%, recently reduced to 4.4%. Sports betting payouts are treated as income to the bettor (taxed 4.4%), although the state also imposes a separate 10% tax on sportsbooks (which does not directly affect your personal taxes). Colorado generally does not require state withholding on gambling wins, so you’ll settle any tax due when filing. (Legal reference: Colorado Revised Statutes § 39-22-104.)

Connecticut

Connecticut is known for having one of the higher state income taxes, and it taxes gambling winnings just like other income. The top rate is 6.99%, and Connecticut requires that **if you win over $600 in gambling, it’s taxable and must be reported. In practice, Connecticut will withhold 6.99% state tax from gambling payouts that exceed certain thresholds (e.g. lottery or casino jackpots over $5,000).

So if you hit a big win at Mohegan Sun or the CT Lottery, expect the state to take about 7% off the top for taxes. (Legal reference: Connecticut General Statutes § 12-700 et seq.; CT Department of Revenue Services guidance requires 6.99% withholding on gambling winnings over $5,000.)

Delaware

Delaware treats gambling winnings as part of your taxable income and uses its normal income tax rates (which go up to 6.6%). Unlike many states, however, Delaware does not have state tax withholding on casino or lottery wins. So if you win big at Delaware Park or the state lottery, you won’t see state taxes taken out on the spot – but you will owe Delaware income tax (up to 6.6%) when you file your return.

Notably, Delaware and Rhode Island have a revenue-sharing arrangement for certain gambling operations, but this does not mean a 51% tax on players (that 51% figure often cited refers to the cut of gaming revenue the state takes from operators, not a tax on your personal winnings). Bottom line: Delaware will tax your gambling haul like regular income. (Legal reference: 30 Delaware Code § 1102, Delaware personal income tax provisions.)

Florida

Florida residents and visitors enjoy no state income tax, which means no state tax on gambling winnings. You can hit the slots, poker tables, or buy lottery tickets in Florida knowing that, aside from federal taxes, your winnings won’t be taxed by the Sunshine State. Florida doesn’t require any withholding on gambling prizes either (since there’s no tax). Keep in mind, if you travel outside Florida and win in a state that does tax gambling, that state’s taxes may still apply – but Florida itself won’t touch your winnings. (Legal reference: Florida has no personal income tax per Florida Constitution Article VII, so gambling income is not taxed.)

Georgia

Georgia taxes gambling winnings as income. Up until 2023, Georgia had a top rate of 5.75%. Starting in 2024, Georgia moved to a flat 5.49% income tax rate (with further reductions to around 5.39% or lower in future years). So you can figure on roughly a 5%–5.5% state tax on any casino or lottery winnings for Georgia residents. Georgia does not have a specific gambling withholding rule for individual winnings – any tax owed will be paid when you file your GA tax return. (Legal reference: O.C.G.A. § 48-7-27, Georgia taxable income definition.)

Hawaii

Hawaii prohibits almost all forms of gambling (no legal casinos, sports betting, or lottery). Therefore, in practice, there are no in-state gambling winnings to tax. If you are a Hawaii resident who gambles out of state, however, note that Hawaii’s income tax (which ranges from 1.4% up to 11%, one of the highest in the nation) would apply to those out-of-state winnings when you report your income.

There’s an interesting nuance: professional gamblers (people who make a living gambling) could arguably have their gambling income subject to Hawaii’s general excise tax (GET) of 4%, as it’s considered business income. But for most casual gamblers, this isn’t relevant – just know that any gambling income you bring into Hawaii must be reported on your state return and taxed at Hawaii’s normal rates. (Legal reference: Hawaii Revised Statutes § 235-1, which taxes all income earned, even illegal gambling proceeds; Hawaii has no legal gambling establishments.)

Idaho

Idaho taxes gambling winnings under its standard income tax rules. In 2022, Idaho adopted a flat income tax; the current rate is 5.8%. So any gambling income for Idaho residents (or won in Idaho by visitors) will generally face about a 5.8% state tax. Idaho does not have special withholding on gambling payouts – winners are expected to report the income and pay tax at filing. (Legal reference: Idaho Code § 63-3022, Idaho taxable income includes gambling winnings.)

Illinois

Illinois taxes gambling winnings at the state’s flat income tax rate of 4.95%. If you win money in Illinois (from a casino, sportsbook, lottery, etc.) or you’re an Illinois resident who wins elsewhere, you’ll owe 4.95% to Illinois on those winnings. State withholding: Illinois requires gambling establishments to withhold 4.95% state income tax on any single payout over $1,000.

So if you hit a jackpot above that threshold, expect a chunk to be withheld for Illinois upfront. (Despite some rumors or confusion, Illinois does not impose a special 15% tax on gambling winnings – 15% was the old tax on sportsbooks’ revenue. For individual winners, it’s 4.95% flat.) (Legal reference: 35 ILCS 5/201, Illinois Income Tax Act – flat individual rate.)

Indiana

Indiana taxes gambling winnings at its flat state income tax rate of 3.23%. All gambling income (casino prizes, lottery wins, etc.) is included in your Indiana taxable income. Indiana does not mandate state tax withholding on gambling payouts, so winners take home the gross amount (minus federal withholding) and then settle the 3.23% at tax time. (Legal reference: Indiana Code § 6-3-1-3.5 and § 6-3-2-1, defining adjusted gross income to include gambling winnings.)

Iowa

Iowa includes gambling winnings in taxable income. The state has been transitioning to lower flat tax rates. For 2023, Iowa’s top individual rate is around 6% (with multiple brackets), but by 2025 Iowa is moving to a flat 3.9% tax for all income. In 2024, the rate is 4.40% flat for most taxpayers. So depending on the year, expect roughly 4%–6% Iowa tax on your gambling winnings. Iowa generally does not require casinos or the lottery to withhold state tax from winnings (federal withholding will still apply to big wins). (Legal reference: Iowa Code § 422.7 – Iowa gross income includes all gambling winnings.)

Kansas

Kansas taxes gambling winnings as part of your income at its state tax rates. Kansas has a progressive tax with rates of 3.1%, 5.25%, and 5.7%. For moderate to large wins, you’ll likely pay the top rate (~5.7%) to Kansas. Notably, Kansas allows you to win up to $5,000 without state tax withholding – only once you go over $5k would you potentially see withholding (which mirrors the federal threshold).

But even if no tax is withheld, any amount over $5,000 (and in fact, all winnings) still must be reported and taxed. In short, Kansas will take about 5% of your gambling windfall at tax time if you’re a resident or win within the state. (Legal reference: K.S.A. 79-3302 and 79-3226; Kansas personal income tax includes gambling earnings.)

Kentucky

Kentucky imposes a flat 5% state tax on gambling winnings. This is because Kentucky moved to a flat income tax (currently 5%). Lottery wins, casino payouts, and any other gambling income are all subject to that 5% state tax, regardless of amount. There’s no special exemption or threshold – even a $50 bingo win is technically taxable (though no one is likely sending you a form for small amounts). Kentucky does not require payers to withhold state tax from gambling prizes, so be prepared to pay the 5% when you file your KY taxes. (Legal reference: KRS § 141.020, setting a flat 5% tax rate on individual income.)

Louisiana

Louisiana taxes gambling winnings as part of its state income tax, which has graduated rates. As of 2022, Louisiana’s brackets were simplified to 1.85%, 3.5%, and 4.25% (4.25% being the top rate on income over ~$50,000 for single filers). For most sizable gambling winnings, you’ll hit the top 4.25% bracket. There has been some confusion from different forms of gambling: for instance, land-based casino winnings in Louisiana are effectively taxed at the normal rate (up to ~4%), while certain online gaming or daily fantasy contest winnings might have had higher withholding (some online platforms reported withholding at 6% or 8% for out-of-state).

However, generally Louisiana does not have a separate higher tax for online wins – all gambling income is taxed at the same income tax rates. There is no mandatory state withholding on casino or betting payouts in Louisiana for residents, so you must report and pay the tax later. (Legal reference: Louisiana Revised Statutes § 47:32 (individual tax rates) and § 47:293(9)(a) including gambling winnings in gross income.)

Maine

Maine taxes gambling winnings at its state income tax rates, which are progressive (with a top rate of 7.15%). So your lottery or casino win in Maine will be taxed anywhere from ~5% up to 7.15%, depending on the size of the win and your other income. Maine State Lottery handles all gambling in the state and will withhold 5% on any prize over a certain amount (generally when federal withholding applies, i.e. wins over $5,000).

That 5% withheld is essentially an estimate toward your Maine tax (the actual tax could be a bit higher if the win pushes you into the top bracket). If you’re a non-resident who wins in Maine, Maine can tax that winning at the same rates (you’d file a non-resident return). (Legal reference: 36 M.R.S. § 5111 et seq., Maine individual income tax rates; Maine Lottery Commission rules on withholding.)

Maryland

Maryland taxes gambling winnings and actually has two levels of tax – state and local. The state’s top rate is 5.75%, but each county (and Baltimore City) adds up to ~3.2% local income tax on top. For many Maryland residents, the combined tax rate on income (including gambling winnings) is around 8%–9%. Maryland is one of the few that definitely withholds on gambling payouts: if you win over $5,000, the payer will withhold 8.75% for Maryland residents, or 7.00% if you’re a nonresident.

This accounts for the state tax and a rough average local tax. So for example, a big Maryland Live! Casino jackpot will have 24% federal + 8.75% MD withheld upfront. Nonresidents (e.g. someone from Virginia hitting a win in MD) get 7% withheld, which covers Maryland’s claim – they’d then file for any difference. (Legal reference: Maryland Tax-General Article § 10-905, requiring 8.75% withholding on gambling winnings for residents.)

Massachusetts

Massachusetts taxes all gambling winnings as income at a flat 5% rate. There’s no personal exemption for gambling – any amount you win is technically taxable. In practice, Massachusetts will withhold 5% from certain payouts, especially lottery prizes over $600 (and casinos will report wins over federal thresholds). If you have smaller winnings under $600, you won’t see withholding, but you are still required to report them on your MA tax return. Massachusetts is clear that all income is taxed at 5%, including casino winnings, sports betting wins, etc. (Legal reference: M.G.L. Chapter 62, § 2 and § 3, defining Massachusetts gross income to include gambling winnings; DOR rule 830 CMR 62B.2.2 on withholding lottery prizes > $600.)

Michigan

Michigan taxes gambling winnings at its flat income tax rate of 4.25%. If you’re a Michigan resident and win at a Detroit casino, online casino, or the lottery, you’ll owe 4.25% to the state on that income. Michigan usually does not have state tax withheld by the casino/lottery (they will issue you a Form W-2G for reporting, but the tax payment is left to you).

One exception: the Michigan Lottery will withhold state tax from prizes over $5,000, which is a courtesy to help winners cover the 4.25% due. Michigan also has city income taxes in places like Detroit – however, Detroit specifically exempts gambling winnings from its city income tax (something worth noting if you’re a city resident). (Legal reference: Michigan Compiled Laws § 206.30(1)(d), including prizes in gross income; MI Income Tax Act sets 4.25% rate.)

Minnesota

Minnesota taxes gambling winnings as part of your income at its graduated tax rates (which range roughly from 5.35% up to 9.85%). Despite what some believe, Minnesota does not give a free pass on gambling income – you do owe state tax on that jackpot. However, Minnesota does not require payers to withhold state tax on gambling payouts (only federal). This might be why some say “nothing extra” at the time of the win. But come tax filing, Minnesota wants its share. For large wins, you’ll likely pay around 9.85% (if the win puts you in the top bracket) to MN. (Legal reference: Minnesota Statutes § 290.01 and § 290.06, state income tax on individuals.)

Mississippi

Mississippi has a state income tax and a special approach to gambling wins. Casinos in Mississippi withhold 3% of your winnings for state tax right at the payout window. This 3% is essentially Mississippi’s tax bite on gambling – and it’s lower than the regular income tax rate (which is up to 5%). In fact, Mississippi law limits taxation on gambling winnings to 3%, treated as “gambling winnings withholding”. So if you’re a nonresident who wins in Mississippi, that 3% is the only MS tax you pay (you don’t file a return for it).

Residents would include the winnings on their MS return, but get credit for the 3% withheld (since MS’s top rate is 5%, some big winners may still owe a bit more at tax time). Mississippi’s system means your casino win has both 24% federal and 3% state withheld on the spot, so you take home 73% and settle any difference later. (Legal reference: Mississippi Code Ann. § 27-7-901 et seq., Mississippi Gaming Withholding.)

Missouri

Missouri taxes gambling winnings as income at its state rates (which are progressive from 1.5% to 4.95% after recent tax cuts). Missouri allows a small exemption: you can win up to $600 without incurring Missouri tax, but once you exceed $600 in winnings, that income is taxable at 4% (and up to 4.95% if you have other income). In practice, casinos or the lottery will issue a W-2G for wins over $1,200 (slots) or $600 (lottery), and Missouri expects you to report it. Missouri does not automatically withhold state tax at casinos, so it’s on you to pay the tax when filing. (Legal reference: Missouri Revised Statutes § 143.011, imposing tax on Missouri taxable income; Missouri income includes gambling prizes over $600 from any single bet, per DOR guidance.)

Montana

Montana taxes gambling winnings at its state income tax rates (1%–6.75%). However, Montana has some special low tax rates for specific games: notably, a 15% state tax on slot machine winnings and only 1% on bingo or keno winnings. These are actually a type of gambling license tax that might be factored into payouts. For the individual winner, practically speaking, if you win on Montana slots, the casino might deduct a state video gambling tax from the jackpot (Montana’s gambling machines are taxed at 15% of net revenue).

But you still have to report the full win on your income tax – you might get credit for any tax already taken out. Bingo/keno winnings over $800 are taxed at 1%. Outside those quirks, if you simply win money (say in a poker game or lottery) in Montana, it’s just income taxable up to 6.75%. Montana doesn’t require separate state withholding on gambling payouts, except for the amounts effectively withheld via those gaming taxes. (Legal reference: Montana Code Ann. § 23-5-610 (15% video gambling tax) and § 23-5-409 (keno/bingo tax); income tax in Title 15, Chapter 30.)

Nebraska

Nebraska taxes gambling winnings and arguably hits certain winnings quite hard. Nebraska’s regular income tax rates go up to 6.64%. But for casino gambling winnings, Nebraska law imposes a flat 5% state withholding on any gambling win that triggers a federal W-2G (generally $1,200+ on slots or $5,000+ on lottery). On top of that, the Nebraska lottery withholds 5% state tax on prizes over $5,000 by law. So effectively, Nebraska ensures it gets 5% off big wins immediately. However, your actual tax could be higher; for large amounts, you might pay up to ~6.6% when filing (the 5% withheld is credited toward your bill).

Nebraska is known for taxing gambling because it only recently allowed casinos and wants revenue. If you’re a nonresident winning at an upcoming Nebraska casino, expect that 5% to be withheld, and you’ll file a NE nonresident return if needed. (Legal reference: Neb. Rev. Stat. § 77-3004 (gaming winnings withholding) and § 77-2715.03 (income tax rates).)

Nevada

Nevada famously has no state income tax – part of why Las Vegas is a gambler’s paradise. No Nevada state tax means your casino and sports betting winnings are not taxed at the state level. You just pay the federal tax. Nevada does not withhold anything for state (since there’s nothing to withhold).

One word of caution: if you are a non-resident and win big in Nevada, your home state could tax that income when you report it federally (unless your home is one of the tax-free states). But as far as Nevada is concerned, you keep it all. (Legal reference: Nevada does not impose personal income tax; see Nevada Constitution Article 10, Section 1.)

New Hampshire

New Hampshire has no general income tax on wages or gambling winnings. (It only levies tax on interest and dividends, which doesn’t include gambling earnings.) So if you’re in New Hampshire, any casino or lottery winnings are not taxed by the state. New Hampshire also does not require withholding on gambling payouts. One caveat: NH launched sports betting and online lottery in recent years, but the state taxes the operators, not the players.

For example, NH arranged a deal where the state gets 50%+ of sports betting revenue from the operator – but this is not a tax on your winnings; it’s built into the betting odds. As a player, you simply face no state tax on your winnings in New Hampshire. (Legal reference: N.H. Rev. Stat. Ann. § 77:4 (taxable income limited to interest/dividends); no personal earned income tax in NH.)

New Jersey

New Jersey taxes gambling winnings as part of its state income tax. NJ has progressive rates up to 10.75%. But here’s a key point: New Jersey withholds a flat 3% from gambling winnings at the time of payout for state tax. This applies notably to casino and racetrack winnings in Atlantic City – casinos will withhold 3% of jackpots for the state. (Interestingly, NJ’s 3% withholding applies to both residents and nonresidents on wins over the W-2G threshold.) When you file your NJ tax return, you’ll report the full winnings as income.

The actual tax could be higher than 3% if you have a lot of income, but you get credit for the 3% already taken out. If you’re a nonresident, that 3% is generally your final NJ tax (you can file a NJ nonresident return to settle up if your tax would be lower, but 3% is relatively low). Also, NJ exempts New Jersey Lottery prizes under $10,000 from state tax – prizes $10k and above are taxable. (Legal reference: N.J. Rev. Stat. § 54A:5-1(c) includes gambling winnings; N.J. Admin. Code 18:35-5.1 requires 3% withholding on certain gambling winnings.)

New Mexico

New Mexico taxes gambling winnings as income under its state tax brackets (which go up to 5.9%). There are no special gambling tax rates or exclusions in NM law – if you win at a tribal casino or the state lottery, that income gets added to your New Mexico taxable income for the year. New Mexico does not mandate state tax withholding on gambling payouts, so winners receive the full amount (less federal withholding) and must pay the state when filing. Nonresidents who win in New Mexico (e.g. at a tribal casino while visiting) technically owe NM income tax on that money and should file a nonresident return, though enforcement is another matter. (Legal reference: N.M. Stat. Ann. § 7-2-2 (definitions of income include gambling winnings).)

New York

New York taxes gambling winnings at its state (and local) income tax rates. New York State’s top rate is 10.9%. So substantial gambling income can be taxed up to 10.9% by the state. State withholding: New York will withhold state income tax (8.82%) from lottery prizes and certain gambling winnings over $5,000. The 8.82% is the older top tax rate (New York recently increased the top marginal rate to 10.9% for ultra-high incomes, but for withholding purposes 8.82% is used). If you are a New York City resident, remember NYC also taxes your income (~3.9% top rate) – however, casinos and lotteries do not withhold NYC tax, so NYC residents may need to pay that portion at tax time.

As an example: a $100,000 lottery win for a NYC resident will have 24% federal and ~8.82% NY State withheld, but you’ll still owe ~3.9% to NYC when you file. Nonresidents who win in NY (lottery or casinos upstate) will have 8.82% withheld and that satisfies NY’s cut (you’d file a nonresident return to reconcile if needed). Also, note: some cities like Yonkers have a small surcharge (1.477%) on residents’ income including gambling. (Legal reference: N.Y. Tax Law § 612 (defines NY AGI, includes gambling income); Tax Law § 671 (withholding requirements on gambling winnings).)

North Carolina

North Carolina taxes gambling winnings at a flat 4.75% (this was 5.25% in prior years, lowered to 4.75% for 2023 onward). NC treats all income the same under its flat tax, so whether you win $100 or $1 million, the state tax will be 4.75%. North Carolina does not have mandatory state withholding on gambling payouts to individuals, aside from the federal requirements.

The NC Education Lottery will send you a W-2G for big wins but generally won’t deduct state tax at the time of the prize. So, if you’re lucky at Harrah’s Cherokee casino or via the state lottery, remember to save ~5% for the NC Department of Revenue. (Legal reference: N.C. Gen. Stat. § 105-153.7 (flat income tax rate), § 105-153.4 (definition of taxable income).)

North Dakota

North Dakota taxes gambling winnings at its state income tax rates, but the rates are quite low. ND has a progressive income tax with rates from 1.1% up to 2.9%. So even on a sizable win, North Dakota’s cut is at most 2.9%. There is no special gambling tax or exclusion in North Dakota. The state does not require casinos or lotteries to withhold state tax on winnings, likely because the rates are small.

If you win in North Dakota as a nonresident (say at a tribal casino), technically you should file a ND nonresident return and pay the ~2.9% on that income, but the state’s overall take is minimal. (Legal reference: N.D. Cent. Code § 57-38-30.3 (individual tax brackets); gambling income is taxable like other income in ND.)

Ohio

Ohio taxes gambling winnings as part of its state income tax. Ohio’s income tax is progressive but tops out at a relatively low 3.99% (as of 2023, incomes above $115k pay ~3.99%). So expect around 4% state tax on your gambling windfall if you’re an Ohio taxpayer. Ohio doesn’t have state withholding on individual gambling payouts. However, note that Ohio does allow a credit if you paid taxes on that winning to another state.

For example, if an Ohio resident wins at a casino in Pennsylvania and PA taxes it at 3.07%, Ohio will credit that, so you’re not double-taxed (you’d just pay the difference up to Ohio’s rate if any). Also, Ohio’s neighboring states (Indiana, Michigan, etc.) have reciprocity on regular wages but not on gambling, so you might have to pay the other state and then credit on Ohio return. (Legal reference: Ohio Rev. Code § 5747.02 (tax rates) and § 5747.20 (credit for taxes paid to other states).)

Oklahoma

Oklahoma taxes gambling winnings at its state income tax rates (which are progressive up to 4.75%). For most significant wins, you’ll hit the top rate around 4-5%. Oklahoma does have casinos (tribal) and a lottery, and those are subject to state tax just like any other income. There isn’t a special withholding requirement for Oklahoma, meaning casinos generally do not hold back state tax from payouts.

If you’re an out-of-state visitor winning in Oklahoma, technically the tribe or lottery might withhold 4% for state tax on big wins (some do as a courtesy), or you may be expected to file an OK nonresident return. Residents will include the winnings on their OK return and pay up to 4.75%. (Legal reference: 68 O.S. § 2355 (Oklahoma individual tax rates); gambling income not exempt in Oklahoma.)

Oregon

Oregon taxes gambling winnings at its state income tax rates, which are progressive up to 9.9%. However, Oregon law has a special rule for Oregon Lottery winnings: prizes under $600 are tax-free, and prizes above $1,500 are taxed at 8% flat (this often applies to Oregon Lottery wins). In general, anything under $600 is not taxed by Oregon, and winnings between $600 and $1,500 face a small tax (around 6.6% on that portion), while winnings above $1,500 are effectively taxed at 8%.

This is a simplification; what it means for players is that Oregon will withhold 8% on large lottery payouts. For non-lottery gambling (like tribal casino wins), Oregon still expects income tax at the normal rates (which could be as high as 9.9%). Oregon does require withholding on Oregon Lottery prizes and certain gambling winnings for nonresidents at that 8% rate. (Legal reference: ORS § 316.189 and § 461.710 (withholding on lottery prizes over $1,500 at 8%).)

Pennsylvania

Pennsylvania has a flat 3.07% income tax and it does tax gambling winnings – except for Pennsylvania Lottery prizes. Under PA law, lottery winnings from tickets purchased in-state are exempt from PA income tax. So a big Powerball win in Pennsylvania is only taxed by the feds, not by PA. But if you win money from a casino (slots, table games), from sports betting, or an out-of-state lottery, Pennsylvania will collect its 3.07% tax. Pennsylvania does not generally withhold state tax on casino payouts (casinos issue W-2Gs for big wins, but it’s on you to pay the tax).

One notable point: until 2016, PA did not tax any gambling winnings (even casino) – but the law changed, and now it taxes all gambling income except the PA Lottery. If you’re a nonresident who wins at a PA casino, PA taxes that too (you should file a PA nonresident return; there’s no automatic withholding except possibly on large poker tournament wins). (Legal reference: 72 P.S. § 7301(d)(viii) and § 7303(a)(1)(v) – PA gross income excludes PA Lottery winnings; all other gambling income is taxable at 3.07%.)

Rhode Island

Rhode Island taxes gambling winnings at its state income tax rates (up to 5.99%). As a small state with big gambling operations (two casinos and sports betting), RI definitely takes a cut of winners’ money. The state will withhold 5.99% on gambling payouts over $5,000 (because that’s the top tax rate) for both residents and nonresidents. In fact, Rhode Island and Delaware have a partnership for online gambling/sports – but that affects operator revenue, not your personal taxes. As an individual, just know RI will tax your win at up to 5.99%.

If you’re a nonresident (say from MA) who wins in RI, that 5.99% withheld is basically your Rhode Island tax paid; you can then claim a credit in your home state. Residents will report the income on RI return and the withheld 5.99% will cover most or all of the liability. (Legal reference: R.I. Gen. Laws § 44-30-12 (tax rates) and § 44-30-71 (withholding on gambling winnings equal to 5.99%).)

South Carolina

South Carolina taxes gambling winnings under its state income tax, which ranges from 0% (for very low income) up to 7% for the top bracket. SC does not have any special exclusions for gambling income, so all your winnings count as taxable income. Notably, South Carolina’s income tax brackets mean that anyone who wins over $16,000 or so in a year will pay the top 7% rate – and gambling winnings over $3,100 are likely to push you into owing some tax.

South Carolina does not require state withholding on gambling payouts, because gambling (aside from the lottery) isn’t legal in-state. The state lottery will report wins to the IRS and state, but I don’t believe SC Lottery withholds state tax on prizes (they will withhold federal 24%). So, winners should be prepared to pay SC’s tax at filing. (Legal reference: S.C. Code Ann. § 12-6-510 (tax rates) and § 12-6-560 (credit for taxes to other states; relevant if SC residents win out-of-state).)

South Dakota

South Dakota has no state income tax, so it does not tax gambling winnings. This is one reason Deadwood’s casinos and other gaming in SD are attractive – aside from federal taxes, your winnings are yours to keep. There’s no state withholding (because no tax).

Note: South Dakota does have a municipal gross receipts tax on Deadwood casinos and on the gambling revenue of the operators, but that doesn’t affect your personal tax. If you live in South Dakota and win in another state, you might owe that other state, but SD itself won’t tax you. (Legal reference: South Dakota has no personal income tax; S.D. Const. Art. XI, § 5.)

Tennessee

Tennessee does not tax personal income (apart from interest/dividends which were taxed under the Hall Tax, now repealed). So, gambling winnings are not taxed by Tennessee. Tennessee has no state income tax forms for individuals, so any casino or lottery wins (not that TN has casinos, but it has a lottery and sports betting) are only subject to federal tax. There’s no state withholding on gambling payouts either.

One thing to note: Tennessee’s lottery winnings aren’t taxed by the state, but if you’re a TN resident who wins the lottery in another state, that other state might tax it (and TN won’t offset because TN doesn’t tax). But within TN or for TN residents, no state tax liability on your gambling wins. (Legal reference: Tenn. Code Ann. § 67-2-110 abolished the Hall income tax as of 2021; no TN income tax on earnings.)

Texas

Texas has no state income tax, so gambling winnings go untaxed by the Lone Star State. You won’t owe Texas anything on your lottery jackpot or big casino score (though Texas only allows limited gambling such as lottery and some sports betting pools). If you travel to gamble, be aware that other states’ taxes could apply, but Texas will not tax income from any source since it has no income tax.

There is no state withholding on gambling payouts in Texas for the same reason. (Legal reference: Texas Constitution Art. VIII, § 24 – no personal income tax without voter approval; none exists, so no tax on gambling winnings.)

Utah

Utah outlaws gambling in virtually all forms, but that doesn’t mean Utahns don’t have to pay tax on gambling income – they do. Utah has a flat 4.85% income tax on all income. So if a Utah resident takes a weekend trip to Las Vegas and wins money, those winnings must be reported on the Utah tax return and taxed at 4.85%. Utah obviously doesn’t have in-state casinos or lottery, so there’s no withholding mechanism in-state.

But be mindful to self-report any gambling income. The state’s strict anti-gambling stance doesn’t exempt you from paying taxes on ill-gotten gains; in fact, even illegal income is taxable. (Legal reference: Utah Code § 59-10-103 (defines adjusted gross income as federal AGI, which would include gambling winnings); § 59-10-104 (4.85% flat tax rate).)

Vermont

Vermont taxes gambling winnings as income at its progressive state tax rates (from 3.35% up to 8.75%). Vermont law specifically mentions that lottery or gambling winnings over $600 are subject to tax. Practically, that means small wins under $600 might not be reported, but legally all winnings should be if you have to file a return. Vermont does not automatically withhold state tax from gambling payouts at casinos or lottery (the VT Lottery will send you a W-2G for big prizes, but they don’t take state tax out at the claim center).

There is a quirky note that some advisors mention: Vermont lottery prize claims – if you provide a taxpayer identification number, certain smaller prizes might avoid backup withholding. But bottom line: Vermont will tax significant gambling income up to 8.75%. (Legal reference: 32 V.S.A. § 5823 (taxable income definition aligns with federal); Vermont Dept. of Taxes guidance on gambling winnings.)

Virginia

Virginia taxes gambling winnings as part of its state income tax, which has a top rate of 5.75%. Virginia’s tax brackets start at 2% for the first $3,000 of income and gradually rise to 5.75% on income over $17,000. Effectively, any decent-sized gambling win will mostly be taxed at 5.75%. For example, if you win $10,000 in an out-of-state casino, Virginia will tax most of that at 5.75% (a small portion at lower rates).

Virginia does not have special gambling withholding at the state level; the lottery or casinos will not deduct VA tax from payouts. You simply report the winnings on your VA return. If you’re a nonresident who wins in Virginia (e.g., at a Virginia charity poker tournament or the lottery), Virginia can tax that and you’d file a nonresident return, but that scenario is less common since Virginia has limited gambling (just a few casinos opened recently). (Legal reference: Va. Code Ann. § 58.1-322 (Virginia taxable income includes all income); § 58.1-320 (tax rates/brackets).)

Washington

Washington State has no personal income tax, so it does not tax gambling winnings. Like Nevada, Washington is a friendly jurisdiction for big winners (at least from a tax perspective – though note, Washington currently only has tribal casinos and a lottery; sports betting is limited to tribal casinos). No state tax means no withholding and no forms for state tax. If you’re a Washington resident who gambles in another state, again, that other state might tax you (and since WA has no income tax, you can’t get a credit – you just eat that cost). But as far as Washington is concerned, you keep your full winnings. (Legal reference: Washington has no state income tax; confirmed by absence in Rev. Code of WA and voter rejections of income tax measures.)

Washington, D.C.

The District of Columbia taxes gambling winnings as part of its income tax, which has brackets up to 10.75%. However, D.C. has some specific rules for gambling payouts, especially lottery winnings. For DC Lottery prizes over $5,000, the District will withhold 8.5% for DC taxes (in addition to 24% federal). That 8.5% represents D.C.’s top tax on most winners (DC’s top rate is actually 10.75% for income over $1M, but for withholding they use 8.5%).

If you’re a nonresident (e.g., a Maryland or Virginia resident who wins a DC Lottery prize), DC will still withhold 8.5% – and you would file a D-30 nonresident return since DC might treat it as DC-sourced income. Aside from the lottery, any gambling winnings you earn in D.C. (such as sports betting, which is legal in DC) should be reported on your DC tax return and taxed at your normal rate. DC doesn’t have casinos, but it does have sports wagering; those winnings are taxable. (Legal reference: D.C. Official Code § 47-1803.02 (individual income tax rates); DC Office of Tax and Revenue guidance on 8.5% lottery withholding.)

West Virginia

West Virginia taxes gambling winnings at its state income tax rates, which currently range from 3% to 6.5%. WV includes lottery and casino winnings in taxable income. The West Virginia Lottery will withhold state tax on large prizes (generally they align with the $5,000 federal threshold and withhold 6.5%). Casinos in WV (like those in Charles Town or Wheeling) do not automatically withhold state tax from jackpot payouts, but the income is still subject to tax. So if you win, say, $20,000 at the casino, you’ll get a W-2G and need to pay 6.5% (around $1,300) to WV when you file. Nonresidents who win in WV will have to file a WV nonresident return and pay tax; WV often withholds state tax for nonresidents at 6.5% to make sure it collects. (Legal reference: W. Va. Code § 11-21-4 (income tax imposed, up to 6.5%); WV State Tax Dept. rules on withholding lottery prizes.)

Wisconsin

Wisconsin taxes gambling winnings at its state income tax rates (3.54% up to 7.65%). So a big win will be taxed about 7.65% by Madison. Wisconsin doesn’t have a special gambling withholding rule except for the state lottery: the WI Lottery will withhold 7.65% state tax on prizes over $2,000 (the top rate) to cover your liability. Casinos (Wisconsin has tribal casinos) typically do not withhold state tax on payouts to either residents or nonresidents, so those winnings are paid in full and you handle the tax in April.

If you’re an Illinois resident winning at a Wisconsin casino, note Illinois will tax you (4.95%) and Wisconsin cannot tax non-Indian casino winnings because they’re on tribal land (some complexity there, but generally WI can’t tax non-Indians on reservations). However, any legal sports betting (just launched in WI at tribes) or lottery, WI taxes apply. Residents must report all out-of-state gambling wins too (with credit if taxed elsewhere). (Legal reference: Wis. Stat. § 71.02 (imposing income tax) and § 71.01(13) (gross income includes winnings); Wisconsin lottery withholding guidelines.)

Wyoming

Wyoming has no state income tax, so it does not tax gambling or lottery winnings. Wyoming recently introduced sports betting and has some small casinos (tribal or skill games), but none of your winnings will incur state tax. Federal tax, of course, still applies. There’s also no state withholding. Wyoming is a haven for taxpayers in general – one of the nine no-income-tax states. (Legal reference: Wyoming has no personal income tax; Wyo. Stat. Title 39 covers taxes and there’s no provision for income tax on individuals.)

IRS Penalties and State Audit Risks

Before we wrap up, it’s important to understand the consequences of not reporting gambling winnings. The IRS and state tax authorities have become quite savvy at tracking large payouts. Casinos and lotteries report big wins to the IRS (that’s why Form W-2G exists), and the IRS cross-checks your tax return against these records. If you fail to report a taxable win, the IRS will likely send you a notice and a tax bill for the amount you owe – plus interest and penalties. Federal penalties for underreporting income can be up to 20% of the underpaid tax (accuracy-related penalty), and if the IRS determines fraud, it can be even higher. Simply put, it’s not worth trying to hide your gambling income from Uncle Sam.

States, too, are on the lookout. Many states get the same W-2G information and will assess state tax if you don’t include the winnings on your state return. For example, if you live in New York and hit a jackpot, the casino sends that info to New York’s tax department. State audit processes will flag a discrepancy if you omit that income. States can levy their own penalties and interest on unpaid taxes, and in severe cases, could revoke casino licenses or gaming privileges for those who don’t comply (for instance, some state lotteries won’t pay out future prizes if you owe back taxes).

Beyond penalties, consider that gambling establishments might withhold taxes by default. If you refuse to give your Social Security number for a W-2G, the casino may apply backup withholding (a flat 24% federal) which still gets reported. So either way, the IRS will know you won.

To stay on the safe side: Always keep good records of your gambling activity. Save W-2G forms, betting tickets, receipts, etc. Report every win, even if you didn’t get a form for it. If you have offsetting losses, keep a log and claim the deduction (if you itemize) to reduce your taxable winnings. And if you’re ever unsure, consult a tax professional – especially if you have a large win that could have complex implications (like multiple state filings).

Play Smart – And Know the Tax Rules

Understanding gambling taxes isn’t as thrilling as hitting a jackpot, but it’s part of being a responsible player. The key takeaways: the IRS taxes all your winnings, and most states want a piece too (unless you’re in a tax-free state). Before you celebrate that big win, remember that setting aside a portion for taxes will save you headaches later. The good news is you can minimize surprises by knowing the rules and planning ahead

Finally, if you enjoy playing real-money online slots and casino games, make sure you do so in a legal, safe environment – and keep those tax considerations in mind when you win.

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HighRoller.com doesn’t just offer a vast selection of high-payout games; it also provides in-depth resources that explain how U.S. gambling taxes work, both federally and by state. Whether you’re playing from a tax-free state like Florida or Nevada, or one with complex state withholding like New York or Maryland, High Roller helps you understand what to expect when tax time rolls around. Their detailed guides ensure that players are informed before placing their bets—something that can save thousands in unexpected tax liabilities.

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